Key Highlights
- USD/CAD declined heavily and settled below the key 1.3180 support area.
- A connecting bearish trend line is forming with resistance near 1.3130 on the 4-hours chart.
- Canada’s Retail Sales declined 0.1% in August 2019, whereas the forecast was +0.4%.
- Canada’s Wholesale Sales could rise 0.3% in Aug 2019, less than the last +1.7%.
USD/CAD Technical Analysis
This month, the US Dollar started a strong decline from the 1.3350 resistance area against the US Dollar. USD/CAD broke many supports near 1.3250 and 1.3200 to move into a downtrend.
Looking at the 4-hours chart, the pair recently broke a bearish continuation pattern with support near 1.3190. Moreover, there was a close below the 1.3180 support and the 100 simple moving average (red, 4-hours).
The decline was such that the pair below 1.3100 and formed a low near 1.3071. At the outset, the pair is consolidating losses and facing hurdles near the 1.3130 and 1.3150 levels. Besides, there is a connecting bearish trend line forming with resistance near 1.3130 on the same chart.
If there is an upside break, the previous key supports near 1.3180 and 1.3200 are likely to act as strong hurdles for buyers. On the downside, the 1.3070 and 1.3050 levels are decent supports, below which USD/CAD is likely to revisit the 1.3000 handle.
Fundamentally, the Canadian Retail Sales report for August 2019 was released by the Statistics Canada. The market was looking for a 0.4% rise in sales compared with the previous month.
However, the actual result was disappointing, as there was a 0.1% decline in sales. Besides, the Retail Sales ex Auto declined 0.2%, whereas the market forecast was +0.1%.
The report stated:
Following a 0.6% increase in July, sales at food and beverage stores declined 0.8% in August. Decreases were reported at three out of four store types within the subsector. A decrease in sales at supermarkets and other grocery stores (-0.8%) offset gains from July, when sales increased 0.8%. Receipts at beer, wine and liquor stores (-1.9%) were down for the first time in three months.
Overall, USD/CAD remains in a downtrend unless it settles above the 1.3200 pivot area. Looking at EUR/USD and GBP/USD, both pairs are correcting gains, but they remain well supported.
Upcoming Economic Releases
- US House Price Index for Aug 2019 (MoM) – Forecast +0.4%, versus +0.4% previous.
- Canadian Wholesale Sales for Aug 2019 (MoM) – Forecast +0.3%, versus +1.7% previous.
